Europe Factors to Watch-Shares set to bounce, Vivendi eyed

Reuters Staff

8 Min Read

PARIS, July 26 (Reuters) - European stock index futures pointed to a higher
open on Friday, with stocks set to reverse the previous day's losses and climb
back towards eight-week highs hit earlier in the week, as mergers and
acquisitions activity in the media sector lifted sentiment.
France's Vivendi will be in the spotlight after saying it plans to
sell 85 percent of its stake in Activision Blizzard to the video games
maker and its management, marking Vivendi's second blockbuster deal in the past
week after unveiling exclusive talks to sell its controlling stake in Maroc
Telecom for 4.2 billion euros ($5.56 billion).
Vivendi's shares have already gained 3 percent so far this week, and its
stock traded early in Frankfurt was up 1.2 percent early on Friday.
"After a relatively quiet first half of the year, we've just got a flurry of
M&A deals, which is a sign that things are improving and companies are ready to
do acquisitions again," a Paris-based trader said.
"People are now looking for stocks of companies that could become targets,
and this will provide support for the market."
At 0630 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were up 0.4-0.7 percent.
Also boosting sentiment, the U.S. Federal Reserve may debate changing its
forward guidance to help send the message that it will keep rates low for a long
time to come, the Wall Street Journal reported.
European stocks slipped on Thursday, as profit warnings by BASF
and Siemens prompted investors to book recent lofty gains.
The earnings front was mixed again on Friday, with global miner Anglo
American reporting a 15 percent drop in first-half profit, while cement
maker Lafarge reported a recovery in second-quarter profits.
So far this earnings season, about 30 percent of the STOXX Europe 600
companies have reported second-quarter results, with 50 percent of the
firms meeting or beating profit forecasts, according to Thomson Reuters StarMine
data, while 74 percent of S&P 500 companies have met or beaten forecasts.
"The beat ratio may be better, (U.S.) earnings revisions trends may be
stronger, but the consensus still reflects a belief that European earnings
growth will be stronger than the U.S. over the next couple of years. We agree,"
Exane BNP Paribas strategists wrote in a note.
"Operational leverage should now be higher in Europe. With the lead
indicators suggesting the activity trough has passed, a better top-line can
drive a material earnings recovery."
On the macro front, investors will keep an eye on Iceland after Standard &
Poor's Ratings Services on Friday revised the outlook on the country's long-term
ratings to negative from stable and warned it could cut the rating if government
plans to forgive household debt greatly worsens the finances.
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MARKET SNAPSHOT AT 0536 GMT:
LAST PCT CHG NET CHG
S&P 500 1,690.25 0.26 % 4.31
NIKKEI 14,129.98 -2.97 % -432.95
MSCI ASIA EX-JP 523.73 0.1 % 0.53
EUR/USD 1.3282 0.05 % 0.0006
USD/JPY 98.75 -0.53 % -0.5300
10-YR US TSY YLD 2.575 -- 0.00
10-YR BUND YLD 1.663 -- -0.02
SPOT GOLD $1,334.40 0.1 % $1.36
US CRUDE $105.07 -0.4 % -0.42
> GLOBAL MARKETS-Dollar near five-week low, Japan stocks tumble
> US STOCKS-Nasdaq likes Facebook's surge, but earnings curb Dow, S&P
> Nikkei falls to 2-week low as stronger yen, disappointing earnings hurt
> FOREX-Dollar on defensive ahead of Fed meeting; NZD in vogue
> PRECIOUS-Gold up on weaker dollar, headed for 3rd weekly gain
> METALS-Copper stays above $7,000, eyes 3rd weekly gain in 4
> Brent holds above $107 on weak dollar, supply cuts
COMPANY NEWS:
ANGLO AMERICAN
Global miner Anglo American, in the first set of earnings released
under its new chief executive, vowed to slash spending in order to boost cash
flow by $1.3 billion a year by 2016, as it reported a 15 percent drop in
first-half profit.
GLAXOSMITHKLINE
GSK has appointed one of its top European executives as the new head of
operations in China, amid a corruption scandal there that has rocked Britain's
biggest drugmaker.
LAFARGE
Lafarge confirmed its goal to shrink its debt below 10 billion euros ($13
billion) this year and said it would aim to cut it below 9 billion in 2014 as it
reported a recovery in second-quarter profits.
YIT
Finnish construction company posted a bigger-than-expected fall in quarterly
profit due to weak sales of residential and business property in Finland.
CAIXA
Spain's third-biggest banking group La Caixa on Friday said net profit in
the first half of the year had more than doubled to 408 million euros ($540
million), after the bank integrated recent purchases of smaller peers. The bank
beat expectations for a 330 million euro net profit in a Reuters poll of six
analysts.
AIR FRANCE-KLM
Air France-KLM said on Friday it planned to introduce major new
cost-cutting measures in the autumn as Europe's weak economy thwarts efforts to
turn round its medium-haul and cargo businesses.
NOKIA
Global smartphone leader Samsung Electronics Co Ltd forecast a
fall in average selling prices of its smartphones in the third quarter. For
Nokia, which just announced its premium Lumia 1020 smartphone, that means it may
be entering the high-end handset market as it is showing signs of saturation.
BELGACOM
Belgium's dominant telecoms operator Belgacom reported
better-than-expected second quarter core profits, as it compensated a fall in
mobile phone revenues by growth in residential Internet and television products.
USG PEOPLE
Dutch staffing firm USG People reported second-quarter operating
profit at the top end of the forecast range on Friday, and announced additional
cost cuts.
DEUTSCHE BANK, UNICREDIT
London-based private equity fund Pamplona Capital Management LLP said on
Thursday it had given a 4.01 percent stake it owns in Italian lender UniCredit
to Deutsche Bank in exchange for financing.
SAFRAN
French aerospace group Safran raised its full-year profit forecast
on Friday thanks to improved currency hedging and lucrative aftermarket
maintenance contracts.
LUXOTTICA
Italy's eyewear company is confident profits will continue to increase in
2013 in line with sales which rose to over 2 billion euros ($2.65 billion) in
the second quarter, boosted by growth in all markets, including recession-hit
Europe.
LVMH, KERING
French luxury groups LVMH and Kering on Thursday
reported a pick-up in second-quarter sales, partly due to improved demand in
Europe and solid growth in Japan.